Indian state Jharkhand junks its solar contracts as it finds them too Costly

Many Indian states have become slightly crazy with their solar power commitments going overboard without having the capacity or real need to do so. The Indian central government target of building 100 GW of solar power up from just 8 GW now has pushed many state governments to go a bit bonkers. Jharkhand which is a piss poor state in the middle of India with a large mineral base, but with little industry and agriculture is one of them. The state government had come out with a 1200 MW solar tender which was one of the largest at that time. It made little sense considering the fact that the state’s overall capacity is just 3000 MW and it has tons and tons of cheap coal lying beneath its soil. A smaller tender to meet  its Renewable Energy Obligation of 200 MW would have been enough, but the state for whatever crazy reason went in for a 1200 MW solar tender.

Also read Can Jharkhand move from 16 MW to 18 GW – A step forward!

It is also to be remembered that the state’s power policy is a mess with its main distribution utilities owning hundreds of millions in debt and being ranked as the worst utilities in entire India for their dismal financial condition. The state loses around $150 million every year due to electricity theft and inefficiency besides pricing power below the cost of production. It is a classically mismanaged state which has failed to develop despite having rich resources. The state failed to develop a large hydro and a thermal power plant despite almost 20 years of trying, due to issues in land acquisition and plain sloth and corruption. Now it looks like it will miss the solar boat as well.

The state had one a power auction of solar power capacity and had got bids in the range of between 7 cents to 11 cents a unit. However, despite most companies winning the bids fair and square, the state has refused to sign a PPA with them. This is same as the situation with Telangana state which had dome something similar. The state wants the winner to lower their prices as new bids in other states are being priced between 6 to 7 cents. However, Jharkhand got higher prices as the developers like Hero and Renew do not have faith in the state government or discom them paying them on time if at all. So they priced the power higher factoring in the higher risk.

Also read why India’s tribal state of Jharkhand receives high solar tariff bids.

Also it makes little sense of the state to buy 1200 MW of solar power when it does not need to do so as per its green commitments. It can buy much cheaper power form other sources or generate from its billions of tons of coal reserves. A check of awarded projects shows 1200 MW of solar capacity of ReNew Power, Adani Power and ACME Solar and about 600 MW of wind capacity is stuck for the lack of PPAs in Jharkhand.